The use of certificates will be critical to meet the increasing sustainable biomethane aka renewable natural gas (RNG) demand from the private sector, support the economics of new production capacities, and ultimately contribute to climate change mitigation efforts. A new analysis by S&P Global Commodity Insights and supported by the European Biogas Association (EBA), European Renewable Gas Registry (ERGaR), Eurogas, and the RNG Coalition, provides valuable input to the ongoing revision process of the GHG Protocol.
The EBA, ERGaR, Eurogas, and the RNG Coalition engaged S&P Global Commodity Insights to review biomethane aka renewable natural gas (RNG) certification and tracking systems in Europe and the United States.
The analysis “Renewable gas tracking systems – Value of biomethane/RNG certificates” examines the role of certificates for producers and consumers in major demand sectors, the additionality of biomethane production associated with certificate use, and a review of historical certificate values in both regions, highlighting key price drivers.
Certification provides sustainability guarantees and transparency
Biomethane is a key driver of greenhouse gas (GHG) emissions reductions, amounting to reductions of around 15 million tonnes of carbon dioxide equivalents (CO2eq) in the EU in 2023 and around 5 million tonnes of (CO2eq) in the US.
Tracking the use of biomethane through certificates conveys their renewable and climate value to energy consumers, providing sustainability guarantees and transparency about the production process.
This enables energy suppliers and large energy consumers to make credible claims regarding their commercial offers or their sustainability reporting, as they seek to reduce their GHG emissions and achieve decarbonization targets.
As the biomethane sector scales up, certificates are critical for biomethane producers to rely on market-driven revenues instead of government support schemes and allow biomethane projects to be cost-competitive against conventional natural gas and other fossil fuels.
Demand for biomethane procured via certificates comes from compliance markets such as road transport fuels, and increasingly voluntary markets, with leading European and US corporations such as food and beverage companies, chemicals producers, and shipping companies.
Biomethane certification schemes work
In the European Union (EU), the trading of biomethane is legally tracked through Guarantees of Origin (GOs) and Proof of Sustainability (PoS) certifications, supporting biomethane capacity development and incentivizing the use of sustainable low-carbon feedstock.
Additionally, the EU Union Database for Biofuels (UDB) will become operational at the end of 2024, facilitating the traceability of mass-balanced certificates.
The importance of robust biomethane tracking systems and understanding the value of biomethane certificates becomes apparent when considering the forecasted unprecedented growth in biomethane production to 2030.
The EU has set an ambition to produce 35 bcm/y by 2030. A significant part of this growth needs to come from the voluntary market where the GHG Protocol guidance is an essential element as many companies rely on the protocol as the main tool to account for and report their GHG emissions.
Currently, the GHG Protocol does not provide explicit guidance on how companies should use certificates to account for GHG emissions savings achieved by procuring biomethane.
Biomethane certification schemes have proved to be functional in helping to scale up biomethane production in the EU and US compliance-based markets.
The new S&P Global Commodity Insights report states that additional clarity and alignment on the inclusion of biomethane in the GHG Protocol, will facilitate the development of sustainable biomethane production and use globally.
